US futures dip, stocks pare gains as bonds advance: markets wrap

US equity futures fell and Asian stocks trimmed gains Monday as slowing economic growth and sticky inflation continued to handicap markets.

In a quiet session ahead of the US Independence Day holiday, an Asian share index climbed but was off the day’s high, S&P 500 contracts shed about 0.5% and European futures pushed higher.

Sovereign debt extended a rally triggered by a reassessment of how high central banks can hike interest rates to fight inflation given that economic expansion is wobbling. Bonds rose in New Zealand and Australia, while Treasury futures were little changed — there’s no cash trading due to the US break.

The dollar was firm, oil fluctuated around $108 a barrel and Bitcoin retreated toward the $19 000 level.

In the US and elsewhere, signs of economic weakness are becoming more apparent in everything from personal spending to manufacturing. Investors are increasingly fretting about recession and its implications rather than focusing exclusively on elevated price pressures.

Financial markets “remain focused on the risk of a sharp slowdown in the global economy,” Carol Kong, a strategist at Commonwealth Bank of Australia, wrote in a note. She added that backdrop could bolster the dollar this week.

In China, officials are trying to repel a Covid flareup that could buffet an economically significant region. That’s another test of Beijing’s strategy of trying to eliminate the pathogen with mass testing and disruptive lockdowns.

Separately, developer Shimao Group Holdings Ltd. said it didn’t pay a $1 billion dollar note that matured Sunday, among the biggest dollar payment failures so far this year in China.

What to watch this week:

• Australia rate decision, Tuesday
• PMIs for euro area, China, India among others, Tuesday
• US factory orders, durable goods, Tuesday
• FOMC minutes, US PMIs, ISM services, JOLTS job openings, Wednesday
• EIA crude oil inventory report, Thursday
• Fed Governor Christopher Waller, St. Louis Fed President James Bullard, scheduled to speak, Thursday
• ECB account of its June policy meeting, Thursday
• US employment report for June, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.5% as of 7 a.m. in London. The S&P 500 rose 1.1% Friday
• Nasdaq 100 futures fell 0.6%. The Nasdaq 100 rose 0.7% Friday
• Japan’s Topix index rose 1.3%
• Australia’s S&P/ASX 200 index increased 1.2%
• South Korea’s Kospi index shed 0.5%
• Hong Kong’s Hang Seng index fell 0.4%
• China’s Shanghai Composite index added 0.2%
• Euro Stoxx 50 futures rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index was steady
• The euro was at $1.0433, up 0.2%
• The Japanese yen was at 135.30 per dollar, down 0.1%
• The offshore yuan was at 6.6926 per dollar

Bonds

• The yield on 10-year Treasuries declined 13 basis points to 2.88% Friday
• Australia’s 10-year yield declined eight basis points to 3.53%

Commodities

• West Texas Intermediate crude rose 0.4% to $108.85 a barrel
• Gold was at $1 812.82 an ounce, up 0.1%